Despite much uncertainty over Greek debt and the austerity vote today, yesterday saw the dollar pull back and that underpinned a stronger tone in equities and metals. By the close the base metals were up an average of 0.9 percent, with copper up 0.6 percent at $9,049. Gold and silver tried to move higher, but seemed to struggle closing up 0.2 percent and 0.4 percent respectively, this was even though the dollar was weaker. Indeed we are surprised bullion did not get more lift ahead of today’s crucial vote – this is especially so when even if EU banks agree to roll-over debt the ratings agencies may well deem such a development as a default anyway. Overnight the metals have generally held on to their gains that have averaged 0.2 percent, with copper rising the most with a 0.5 percent rise to $9,090, nickel up 0.3 percent at $22,720 and the rest up flat to 0.2 percent firmer. Volumes have picked up to 3,209 lots, up from this time yesterday, but remain below Monday’s 5,250 lots, see table on right for more details. The dollar is weaker with the dollar index at 75.00, the euro is at 1.4370, sterling is 1.6000, the aussie is firmer at 1.0570, while the yen is weaker at 81.00. So the market seems to be saying they expect the Greek vote to be passed. Gold and silver, however, are firmer at $1,506 and $34.17 – at first thought you could be forgiven for thinking they might be in a win-win situation as if the vote is passed the dollar will likely fall and that will boost metal prices, while if the vote fails then safe-haven buying could kick-in. This could happen, but if the vote does fail then there may well be a broad based sell-off that could initially take bullion prices down too, although the secondary reaction may be bullish for gold. Equities – the Dow was upbeat for a second day with a 1.2 percent gain yesterday and that mood as flowed through to Asia where the Nikkei is up 1.4 percent, the Hang Seng is up 0.4 percent, the MSCI Asia Apex is up 0.7 percent, although China’s CSI is down 0.7 percent. China may well be down as higher commodity prices threaten inflation again. In Shanghai the September metals are up an average of 0.4 percent, copper is leading the advance with a 1.1 percent gain to Rmb 67,960, lead is up 0.3 percent at Rmb 16,950, while aluminium and zinc are up 0.2 percent at Rmb 17,085 and Rmb 17,440, respectively. Spot copper in Changjiang is up 0.3 percent at Rmb 68,430 -68,700, while the LME/Shanghai arb remains a negative $140/tonne. Data already out shows Japan’s industrial production rising 5.7 percent from 1.6 percent previously – once we get passed this stage of the Greek debt crisis we feel focus may well turn to Japan’s post-tsunami rebound. Later we get a host of UK data on lending, mortgages and services, followed by US pending home sales and crude oil inventories – see table on right for more details. We think the pivotal Greek vote is expected at around 2pm in Athens. Today all eyes will be on the Greek vote - given the implications of not passing it, its likely that it will be passed, but that is unlikely to be the end of the matter as the austerity packages then has to be implemented. On balance today’s vote, if passed, may provide some short-term gain, but will add to the long term pain and in the end is likely to have just bought more time. However, this may well lead to a relief rally in the markets, especially as we head towards the end of the month and second quarter. That said on the less bullish side the markets have other issues to think about including the end of QE2 and continuing global economic slowdown.

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